Top 5 Mistakes made when Starting a Medical Practice
To be in private practice or to be hospital employed? For some physicians, it’s a no-brainer, there’s no way they’re going to work for a hospital. They want the independence that business owners get to design their own patient schedules, employ the staff they want, and go on vacation when they choose. Starting a medical practice can be the most rewarding venture, but it can also be painful if not done correctly. I asked some of our consultants what mistakes are the most common when a physician takes the plunge into private practice, and this is what they’ve seen:
5. Not setting a realistic time line to launch your new practice.
Whether a physician is finishing up their residency, or deciding to leave a hospital or group practice, they rarely ever give themselves enough time to start a practice the right way. Many times it’s a “I need to get up and running ASAP, maybe next month if I can”. Unfortunately it isn’t that easy. When starting a practice you have to take into account time to get credentialed for your new practice, time to find a staff, time to implement systems, time to find real estate. Be flexible with deadlines and unexpected delays.
4. Not knowing the financials.
There aren’t many physicians that have a boatload of cash to spend after their residency, so most end up getting business loans from a bank. We don’t necessarily recommend writing a business plan for every practice, but we always make sure the financial plan and proforma is adequately constructed. Make sure you have conservative 3 year projections and a line of credit that will cover you for the first 3 months even if you don’t generate any revenue. Remember, insurance carriers don’t always pay you instantly, sometimes it takes months. It also never hurts to have best and worse case scenarios in your proforma just so you know what you’ll need to do if you don’t get as many patients from the start as you expected. To calculate revenue, determine your expected payor mix and use the carrier websites to see if they post what they pay for specific office visits and procedures. Leave no stone unturned, estimate the cost of EVERYTHING down to the magazines in the waiting room.
3. Hiring the wrong people!
Recruiting and hiring is a skill. Get help to ensure you bring in highly motivated staff that are as invested as you are. If you’re going to be in a fast paced practice, hire staff that can keep up with you. Hiring the wrong people can be extremely expensive considering how much you will invest in them to learn your IT systems, equipment, and workflow processes.
2. Choosing the wrong EHR/PM for your practice.
If you aren’t familiar with health information technology, good luck acclimating to the ever-changing and complicated environment. There are over 300 EHR/PM vendors out there and 95% of them are NOT right for you. You can also expect a good number of those vendors to be acquired, go out of business, or not be able to support you in a way that works for you. Right now the safe bet is to start on http://www.cchit.org/, which is the only EHR certification board out there, and look at which vendors are certified. While there are some incredible EHRs out there that haven’t been certified, the HITECH stimulus package is promising incentives for only “certified” products. Always choose the EHR first, and then make your Practice Management system decision.
1. Not asking for help from someone who knows business.
Let’s face it, medical school is just not geared around teaching physicians how to start a medical practice. The majority of physicians also don’t have the time to sit down and read books on how to start a practice in the hopes that it will actually guide them to success. This is a process with a million variables that requires expertise. At the very least, talk to family and friends that know business. In an ideal situation, you’d bring in an expert to help you with starting your own practice (read: 9 steps to Successfully Starting a Medical Practice). In the long run, the upfront investment in the expertise will not only save you time and money but it will generate more money than you could have without consulting with an expert.
Related:
9 Steps to Successfully Starting a Medical Practice
